Transcript for the audio podcast:Hospital Compliance Initiative

[Jeannette Gaughan] I'm Jeannette Gaughan, Senior Auditor for the Office of Audit Services in Boston. Today I'm speaking with Kim Rapoza, an Audit Manager, here. The Office of Audit Services has done many hospital reviews in the last three years, as part of our Hospital compliance initiative. Can you give us a little background on this initiative?

[Kim Rapoza] Sure. In 2010, our office began reviewing acute-care hospitals by looking at many risk areas during an audit rather than focusing on one risk area - like we used to. We are able to identify these risk areas because we have increased our data storage, computer matching and data analysis capabilities.

[Jeannette Gaughan] Explain risk areas.

[Kim Rapoza] One example of a risk area would be incorrectly billed transfers from acute-care hospitals to post-acute settings, like skilled nursing facilities. We can match skilled nursing facility claims to hospital claims to determine if the hospital billed the transfer claim correctly.

[Jeannette Gaughan] How have hospitals responded to this new type of review?

[Kim Rapoza] The majority of providers have responded positively. Hospital compliance officers have been following the published audit reports on our website and have been preparing for these types of audits. They've used our reports to educate their staff and enhance their billing procedures to comply with Medicare rules and regulations.

[Jeannette Gaughan] Can you tell us how the Hospital compliance initiative has evolved since it began in 2010?

[Kim Rapoza] In the beginning, our reviews focused on about 27 hospital billing issues that OIG flagged over the last 20 years. Over time, we learned from our experience and added new billing issues. We also added a contract for medical review to help us with claims that require a medical professional's opinion.

[Jeannette Gaughan] And why is it so important for OIG to focus on hospitals?

[Kim Rapoza] We focus on hospitals for several reasons. The first is that payments to acute-care hospitals make up about 45 percent of all Medicare fee-for-service payments. This was roughly $151 billion dollars for 2011. The second reason is that hospital billing is very complex, making it prone to errors.

[Jeannette Gaughan] How many hospitals have you reviewed with this initiative?

[Kim Rapoza] We've completed reviews of 79 hospitals across the country and recovered about $34 million dollars. We are actively working with another 25 hospitals right now.

[Jeannette Gaughan] Is the plan to review all hospitals?

[Kim Rapoza] No. With nearly 3,600 acute-care hospitals, we don't have the resources to visit them all or review all of their claims. OIG chooses hospitals based on data analysis, discussions with Medicare contractors, or based on other OIG work. As this initiative has matured, we've started to include statistical sampling to draw conclusions about a larger portion of the hospital's claims.

[Jeannette Gaughan] What key things should hospitals, and their compliance officers take from these reviews?

[Kim Rapoza] Hospitals should know first and foremost that we appreciate their cooperation. Secondly, they should keep in mind that these reviews are based on data from their Medicare claims and that each hospital review is unique. Because of this second factor, we review different risk areas at different hospitals and use both statistical and non-statistical methods for selecting our samples.

[Jeannette Gaughan] What about hospital management and governing boards? How do they fit into this picture?

[Kim Rapoza] Hospital compliance officers should use these reviews to involve and engage hospital management, governing boards and audit committees. It's important for management to create a culture of compliance in their hospital.

[Jeannette Gaughan] What are the goals of the Hospital compliance initiative? What do you hope to see 3 to 5 years down the road?

[Kim Rapoza] We hope this improves hospital billing and reduces the number of billing errors. We also expect hospital compliance staff to proactively identify problems and return Medicare dollars billed in error.

[Jeannette Gaughan] Do you expect many changes to this initiative as time goes on?

[Kim Rapoza] The Hospital compliance initiative will adapt to new Medicare rules and regulations as well as new hospital billing patterns. The key to this initiative is the flexibility to increase its effectiveness and achieve its goals.

[Jeannette Gaughan] Do you have any plans to expand these reviews to other types of providers?

[Kim Rapoza] Yes. We can transfer the concept of reviewing claims in multiple risk areas to other types of providers.

[Jeannette Gaughan] Thank you Kim, for sharing this important information on the OIG's hospital compliance initiative.